SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 30, 1998
CENTRAL MAINE POWER COMPANY
(Exact name of registrant as specified in its charter)
Maine 1-5139 01-0042740
(State of Incorporation) (Commission (IRS Employer
File Number) Identification Number)
83 Edison Drive, Augusta, Maine 04336
(Address of principal executive offices) (zip
code)
Registrant's telephone number, including area code: (207) 623-3521
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Item 1 through Item 4. Not applicable.
Item 5. Other Events.
1997 financial results announced. On January 30, 1998, the Company announced its
financial results for 1997. The Company reported earnings of $5.2 million ($0.16
per share), including $3.9 million ($0.12 per share) earned in the fourth
quarter. Earnings for 1996 were $50.8 million, or $1.57 per share.
Replacement-power costs and other costs related to the now-closed Maine Yankee
nuclear plant were the main factors that eroded 1997 earnings from their 1996
level.
The Company's electric operating revenues for 1997 were $954.2 million, down 1.3
percent from the 1996 level of $967 million. Lower non-territorial energy sales
resulting from Maine Yankee's being off-line and reducing the Company's total
energy supply were the main factor in the decline in total revenues. Revenues
from the Company's service area rose 2.2 percent in 1997 to $890.1 million, on
energy sales of 9.35 billion kilowatt-hours, up 1.4 percent from 1996.
The Company incurred $59.5 million in additional costs to replace Maine Yankee
power and pay its share of increased repair and other operating costs at Maine
Yankee in 1997. With the decommissioning process commencing, the Company expects
that its share of Maine Yankee operating costs could decrease by as much as $30
million in 1998.
Despite the $75 million in annual Maine Yankee-related costs imbedded in the
current determination of the Company's required revenues for ratemaking purposes
and despite success in controlling other costs, the higher nuclear-related costs
incurred by the Company in 1997 reduced earnings to a level that triggered the
low-earnings bandwidth provisions of the Company's Alternative Rate Plan
("ARP"). That provision is activated when actual earnings for a year are outside
a bandwidth of 350 basis points above or below a 10.55-percent current
rate-of-return allowance. The Company's earnings for 1997 represent a rate of
return on common equity of 1.04 percent. A return below the low end of the range
provides for additional revenues through rates equal to one-half the difference
between the actual earned rate of return of 1.04 percent and the 7.05-percent
(10.55 percent minus 350 basis points) low end of the bandwidth.
The Company's 1998 ARP filing will also contain information for the Maine Public
Utilities Commission ("MPUC") on the Company's costs of restoring service to its
customers after the previously reported severe ice storm of January 7 through 9,
1998, and a second ice storm that struck part of the Company's service territory
on January 24, 1998. A January 15 Order of the MPUC allowed the Company to defer
such incremental costs on its books pending the Company's filing under the ARP,
which allows the MPUC to consider and provide recovery of costs of certain
"extraordinary events". The Company estimates that its total incremental
restoration costs from the storms could total approximately $60 million to $65
million. Such costs were largely labor-related, as the Company used hundreds of
crews from out-of-state utilities, tree-service companies, and construction
firms to repair the unprecedented damage, which required more than 400,000
service restorations. The Company is studying available means of mitigating the
cost impact of the storms.
The effect of the sharing provision of the ARP on the Company's revenues will be
determined when the MPUC considers the Company's 1998 ARP rate-cap adjustments
upon the Company's next annual ARP compliance filing with the MPUC, which is
scheduled for March 15, 1998. However, the Company cannot predict the amount of
additional revenues that may result, and, in any case, any entitlement to such
revenues under the ARP would not be likely to start until July 1, 1998.
In announcing its 1997 results, the Company re-affirmed its earlier public
statements that it intended to stand by its objective of holding price increases
at or below the rate of inflation through 1999 in order to attain its goal of
price stability. The Company believes that stable prices continue to be
essential to its ability to retain and promote electricity sales.
Item 6 through Item 9. Not applicable.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTRAL MAINE POWER COMPANY
By ________________________________
Curtis I. Call, Treasurer
Dated: Februry 3, 1998
